These three tips may help you save thousands of dollars in higher education costs
Although college isn't for everyone, the fact remains that college graduates earn much more today than high school graduates. Yet the cost of a higher education often prevents many people from trying to get one. What most people don't know is that the financial aid offer they receive from schools is not the last word—tuition is negotiable.
How do you go about it? Try following these three tips and you may save thousands of dollars.
- Know the numbers that the financial aid office is using
- Appeal to the admissions office for larger merit scholarships
- Use other schools and scholarships to your advantage
If you didn't get as much financial aid as you were expecting, you can appeal the financial aid office's decision. The key is knowing the numbers that the office is using to calculate your offer.
"Financial aid offices report to me that only one in 100 families knows how [to negotiate]," says Hans Hanson, author of Dissecting the Big Business of College and founder of College Logic. "It's not calling up and complaining about costs; rather, it's knowing their numbers and using them."
There is one number in particular that you need to know to negotiate: the school's percentage of "need met." This number can be found by searching for your school at College Data.com and looking at the "Financial Friendliness" section of the result.
When you fill out and submit the Free Application for Federal Student Aid (FAFSA), the government calculates your expected family contribution (EFC), i.e. the amount that it expects your family to pay. Your "demonstrated need" is the difference between your EFC and the cost of the college. Every school promises to pay a certain percentage of that amount.
Hanson gives the following example: say you want to attend College XYZ. The school's percentage of need met is 75 percent and its cost per year is $50,000. Your EFC is $30,000 and your demonstrated need is $20,000.
Because College XYZ claims that it meets 75 percent of students' demonstrated need, you should expect a financial aid award of $15,000 (75 percent x 20,000).
"If your award is less than $15,000," Hanson says, "then you can appeal based on your award being less than the college's stated percentage of need-met. You appeal to get your fair share."
Every financial aid office has heard complaints about the cost of tuition. When you have actual data to back up your claim, you are much more likely to be successful in your appeal.
The financial aid office only deals with need-based aid. If you want a bigger merit scholarship, you'll need to head over to your school's admissions office.
After you get accepted to the college, suggests Hanson, tell the admissions office what it's going to have to do to get you to choose their school over the others you've been accepted to.
"The admissions office has a job to do — and that's to convert your acceptance into an enrollment," he explains.
Merit scholarships are the incentive that admissions offices can use to convince you to enroll. When negotiating with this office, you'll need to know the school's conversion rate—the percentage of accepted students that actually enroll. (This number can also be found on College Data.)
"The lower the college's conversion rate, the more it needs to use merit awards to incentivize families to enroll," explains Hanson.
Schools with low conversion rates can often offer higher scholarships to reach the number of students they want enrolled. But they won't tell that to students and their parents, who will then pay more than they need to in tuition costs.
If you've been accepted to other schools with better financial aid offers, don't be afraid to use this fact to your advantage when you talk to admissions.
Leverage the bigger scholarship you got to that comparable school when you negotiate. However, remember that this is a formal appeal process, so you'll have to have documentation of the higher offer(s) you got from the other college(s).
If you get accepted to both your first-choice and second-choice schools and your second choice offers more aid, don't hesitate to bring this up with your first choice.
Every school is different, and one negotiation tactic may not work as well at one as it would at another. But you should still try every tool in your arsenal to get the best possible deal on tuition. Think of it as practice for the real world!